Late payers face interest charges after EU directive comes into force

Businesses are to come under pressure to pay all invoices within 60 days after an European directive came into force over the weekend.

The late-payment directive goes even further for public sector organisations, which have to pay suppliers' invoices within 30 days – half the time given to private sector businesses.

The directive will also allow a supplier to levy interest charges of 7 per cent over the Bank of England base rate on late-paying customers.

The law addresses concerns that big business is taking advantage of relationships with suppliers by demanding payment terms and deadlines that effectively hand them an interest-free loan.